ECOA/TILA. Q: Due to the current cost of credit reports, bank management would like to charge the customer for a credit report at the time of application. Does the credit report fee need to be disclosed in writing before accepting a loan application for auto and unsecured loans?

I am mainly concerned about disclosure requirements in the event a loan does not reach consummation, such as being denied due to credit, and the fee was paid by the consumer at the time of application. No disclosure would generally be provided in such a case. However, “before consummation” in this case is before an event that will not happen; therefore, am I correctly reading that, even though a consumer made a financial investment in the transaction, a disclosure would not be required by either Regulation B or Regulation Z because consummation did not occur as defined by state law?

A: The bank is permitted to collect the credit report fee at application. The fee it charges has to be bona fide and reasonable. There is no regulatory requirement in the federal consumer rules we address that requires disclosure in a case like this. The bank may, if it desires, create a form that the borrower signs.

Of course, if the loan does close, the fee must be included as part of the finance charge for non-real estate loans.

The bank should ensure that all lenders charge the fee for all applicants to avoid fair lending issues.

The bank also may want to double-check its state law to make sure it does not require some form of disclosure.

EFTA. Q: Our Operations Department is currently reviewing a dispute in which the customer notified the bank on 3/9/26 that weekly charges of $19.99 being charged to her debit card. The charges began on 12/12/25. The first statement showing the initial charge was on 1/5/26.

As it stands now, the bank will absorb all unauthorized charges. However, when our Operations Department contacted the customer for more information, she stated that she saw the charges last month but didn’t call the bank right away and then forgot about them until 3/9/26.

Is the bank obligated to use 3/9/26 as the date of first contact, or can we use the customer’s knowledge of the charges a month earlier to recalculate the customer’s liability?

A: Regulation E error resolution time limits are dependent on how long it is (after the first statement reflecting the error) before the customer notifies the bank of an error reflected on a periodic statement, not on how long it is after the customer first notices the error on that statement.

So, in this case, the first statement reflecting the error is dated 1/5/2026. If that is also the date the statement was sent, then the customer has 60 days after that date — until Friday, March 6, 2026 — to notify the bank of the error for a timely notice. If the notice is not timely, the bank is not bound by the error resolution time limits and notice requirements of 12 CFR 1005.11. However, if the asserted error involves unauthorized EFTs, then “the institution must comply with § 1005.6 before it may impose any liability on the consumer.”

Section 1005.6 requires the bank to still hold the customer harmless for any unauthorized EFTs occurring within 60 days after the first statement was sent that reflected the unauthorized EFT (or series of EFTs). However, the bank would be able to hold the customer liable for any such EFTs that occurred after 60 days, but before notifying the bank. So, in your scenario, if any occurred over that weekend between March 6 and Monday, March 9, the customer could be held liable for them.

TILA. Q: Our borrower wants to pledge rental properties they already own as collateral to get one lump sum from us that they will use to construct a new primary residence. We will not have a security interest in the new residence at all. Would this loan be a “home equity loan” for TRID purposes or a “construction loan”?

A: Assuming the rentals are owned free and clear, then this would be a “home equity loan.” A “construction loan” must be for the purpose of the initial construction of a dwelling and be secured by that dwelling. Since the bank will not hold a mortgage in the new residence, this would be a “home equity loan” (since it also is not a “purchase” or a “refinance”).

RESPA. Q: We have a loan that is delinquent and has a surplus in its related escrow account. This account just went through the annual escrow account analysis and has a sizable surplus. Can the bank apply the surplus to the delinquent loan?

A: No, the bank may not. If the borrower is current, the surplus (> $50) must be refunded to the borrower. If the borrower is not current at the time the surplus is determined, the surplus may be retained in the escrow account. No provision is made to allow the lender to take the surplus to satisfy delinquent amounts, late fees or similar loan charges.

CRA/HMDA. Q: We are an HMDA reporter and eligible for the partial exemption. I am thinking of switching our loan software to support the exempt fields. What considerations do I need to be aware of for CRA reporting if I make these changes? Currently, we are a small intermediate reporter for CRA.

A: There is probably no real CRA impact in taking advantage of the partial exemption. Looking over the exempt data points, there do not seem to be any that would affect the bank’s chances of a CRA “satisfactory.”

Flood Insurance. Q: We have a property securing a loan that was not in a flood zone when the loan was originated, but the map has since changed, and the property is now in a flood zone. Since this happened after the loan was originated, does the bank have to escrow for flood insurance?

A: This is not one of the “triggering events” — making, increasing, renewing or extending (MIRE) — a loan, so starting escrow of flood premiums is not mandated. However, remapping is one of those situations in which the lender may have the right (depending on their loan documents) but not the obligation (by regulation) to escrow flood insurance premiums. It becomes a bank decision about whether to protect its security property.

SAFE Act. Q: Are bank employees who are “mortgage loan originators” (MLOs) with NMLS numbers required to take continuing education training each year, as required for state-licensed MLOs?

A: No, MLOs who are registered on the federal registry because they serve as MLOs for federally insured financial institutions are not subject to any continuing education requirements to maintain their NMLS numbers and registration status.

SCRA. Q: We have an applicant for a vehicle loan who is a member of the military and is on active-duty status. Are we allowed to charge our going vehicle loan rate, even if it is in excess of six percent (6%)?

A: Yes, since your borrower is already on active-duty status, they are not covered by the Servicemembers Civil Relief Act (SCRA) interest rate limit. That is a protection that applies only to pre-active-duty debt.